Two Steps Forward, One Step Back in Transparency

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The quest for transparency in charities has been an uphill battle. Unlike public companies, the forms that 501(c)3 charities submit are not necessarily all that thorough. They list their incoming and outgoing money, some compensation figures and they verify that they didn’t spend money on illegal activities like influencing political outcomes, but beyond that they don’t need to show the distribution or efficacy of funds.

And in point of fact getting even large and important organizations to show where they spend their money can be painfully difficult. Till Bruckner, a former coordinator at Transparency International Georgia chronicles his long and trying attempt to publicize the actual distribution of funds to Georgia following the 2008 war with Russia. At first TI Georgia requested directly from the aid organizations, but out of 12 organizations only Oxfam GB complied – the others citing “legal and contractual implication involving donors”.  So he went to the donors: much of the money was coming directly from USAID; he filed a Freedom of Information Act request for data on USAID spending on NGOs in Georgia. However:

Six months later USAID informed me that it needed the consent of the NGOs to release this data as it might contain “confidential commercial information,” thereby closing the opacity loop: first NGOs had blamed donors for not being able to release budgets, and now the biggest donor was passing the buck back to NGOs.

There was more wrangling over the months to come, but in the end “one year after my original request for information, the budgets of US-funded NGOs in Georgia remain as elusive as ever.” With little incentive to release the data, red tape can easily leave those who distributed the money free from accountability and able to release information at their own pace and to their own liking.
But this isn’t the only side to the story. Because with increased academic scrutiny and the cheapness of information sites like have brought a new vitality and ease to transparency. In fact, has such minute tracking of government money some seemingly embarrassing entries like this show up:
“Recovery Assistance – Hunger Task Force – Sundries – Limousine for J Sachs”  for which they paid $221.55. And the J Sacks in question? Jeffery Sacks, developmental economist and author of The End of Poverty. To address a commentator’s point, and others’ I’ve read, this is not really such a big deal – limousine services needn’t actually be driving abnormally oblong cars but simply a car service. And there are other mitigating possibilities.
But the important thing here is not the trivial amount of money directed to a limousine service by Irish Aid but rather the massive amount of data that you can discover and expose. With a few clicks, I can find the entire history of USAID’s donations to Georgia from 1994 – 2008 – 23 pages of carefully listed projects sortable by purpose, title, amount and so on. For every setback the fight for greater transparency faces, there are some victories to celebrate.
HT for AidData: Ryan Powers
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Want to host a fundraiser for an official charity of the LA Dodgers?

It’s always great to see when an organization is able to engage its fanbase in an innovative way. ThinkCure, a non-profit that raises communal funds cancer research, calls on its community to help find a cure. They actively encourage supporters to host and manage their own fundraisers, in collaboration with the organization itself.

They also provide a great event planning guide.

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Ramban, Esther Duflo and the Power of Incentives

I sent Tyler Cowen this passage written by Ramban, a 12th Century Jewish Philosopher:

Set aside a sum of money that you will give away if you allow yourself to be angered. Be sure that the amount you designate is sufficient to force you to think twice before you lose your temper… (Ramban: A letter for the Ages translated by Avrohom Chaim Feuer Reishit Chochmah, Shaar Ha’anavah Chapter 3)

Mr. Cowen, along with a number of others, have found the site StickK of interest for its innovative incentivizing of human behavior with a monetary “stick”. The idea, as the quote indicates, is ancient. We’ve dealt with incentives before, primarily how incentives differ between non-profits and for-profits.

But this is a great lead in to the most recent Clark Medal-winner, Esther Duflo. The Clark Medal is awarded every year to the most innovative economist under 40; winners include Milton Friedman, Paul Krugman and Freakonomics co-author Steven Levitt.

Duflo’s contributions have been in the field of poverty research, running the Poverty Action Lab at MIT. Running “randomized field experiments”, that is actively instituting one minimal change into two similar situations to test its efficacy, they’ve made incremental but important progress in a range of fields from teacher attendance to preventing childhood diseases. Many of these studies bare out Ramban’s conclusion: simple, monetary incentives can reap major benefits; in Duflo’s words:

[If I had a million dollars to spend on one poverty alleviation program] I would give it to incentives for immunization. People in very poor countries spend very little on preventive care, maybe for not very good reasons.It is not that they are strongly opposed to immunizations, they just somehow don’t get around to it, or they have other things to do. And what you realize is that spending even a tiny amount of money to get them to invest in preventive care can do a lot.

Duflo’s co-head of the Poverty Lab, Abhijit Banerjee, mentions one clever incentive scheme:

A bunch of students came up with a brilliant solution… which is now being subject to a randomized evaluation in Pakistan. The idea is very self-incentivizing: we look for traces of the medicine in a patient’s urine. In the program the patient puts their urine on a test strip, and if they’ve taken the medicine it reveals a number or code which they can put into their cell phone and get extra minutes. In some ways it is a brilliant solution, but it may not work. The need for experimentation is based on the fact that theory fails often.
The greatness of the randomized studies is that they isolate these potentially hugely productive strategies and break their usefulness down to an essentially empirical question.
The actual perfect strength of the experiments can be questioned, but they do seem to point to the growing trend of thinking how, by maximizing efficiency and leveraging incentives we can save lives. As Banerjee says, the “details matter infinitely.”

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A New Platform for Transparency

13 of 365: HQ
Image by tswicegood via Flickr recently launch The Giving Network, a social media platform that will allow anyone to get regular updates on projects in developing countries. Currently, you can only follow two projects. However, the organization plans to make the platform an open-source project after beta testing.

What makes this so exciting?

Normally, it is extremely difficult to know what is happening on the ground in international development projects. Sure, a charity will tell you about all the problems that need solving, show you pictures of children in Africa, and ask you for money. But rarely does a supporter of the organization know how the current aid projects are progressing. At best, you could look at some abstract figures in an annual report.

This platform looks like a completely different approach. By utilizing new developments in social media, is allowing anyone with an internet connection to get daily updates on progress.

In its current state, the platform leaves much to be desired (there is little tangible information). However, it is something to watch and see how it progresses.

As they develop the platform, is hoping that it will be able to expand the project to follow many more projects. And even better, they want other organizations to use it as well:

Ultimately, however, it wants the portal to be available for use by all charities. As a result, the project is open source. It uses a Django platform that incorporates support for Facebook, Twitter, and Google Maps, and can also display content from the photo-sharing site Flickr, the video site Vimeo, and the blogging platform WordPress. []

Right now, they are asking for feedback on the platform. So take a look. Give them some feedback! If you already have Facebook or Twitter (and who doesn’t?) there no need to create a new username or password.

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Non-Profit Restaurants: Exciting Innovation or CEO Ego-trip?

Slices of French Bread
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Via Charity Navigator, a USA Today story:

Imagine walking into a Panera Bread and picking out anything you wanted to eat or drink — then, at the end of the line, instead of handing your money to a cashier, you faced a donation box…. A sign at the entrance says: “Take what you need, leave your fair share.” Customers who can’t pay are asked to donate their time. The cafe opened Sunday and will operate seven days a week from 7 a.m. to 4 p.m.

Basically, the you pay what you want and the proceeds go to charity. Charity Navigator and some quoted experts in the story seem excited by this notion. But this seems like a major breakdown of specialization. Why should a restaurant try to be a soup kitchen and nonprofit? Does it really have the relevant expertise to organize people donating time and money, not to mention actually making back the money it takes to rent, staff and supply the store? An increase of “20% on opening day [of being a non-profit] vs. the previous Sunday [when it was still a for-profit]” is not such a shockingly high jump in revenue. Of course, I do wish them well.  Just take this with a grain of salt…

And what would be the preferred scheme? Less exciting, but more realistic: specialize! Sell tons of French food in a normal restaurant and then, if you want, give the profits to charity. If preferred, have a selection of charities to donate to. Frankly, I suspect that former Panera Bread’s former CEO is eager to swoop down on from on-business-success-high and sprinkle the shower of brilliant innovation onto the nonprofit world. But somehow a soup-kitchen/pay-what-you-want/charity/French chain cafe combo seems less than realistic.

Also: Freakonomics collects a gaggle of pay-what-you-want schemes.

Another also: USA Today has a blog about weird non-profit schemes

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Hershey’s Innovative Giving

Roller Coaster I, Hershey Park
Image by jnshaumeyer via Flickr

An interesting volunteer opportunity, in line with this blog’s commitment with actually doing the most good and not just feeling like you’re doing the most good:

Hershey Entertainment & Resorts [and other Hershey complexes] offers [sic] a wide selection of job tasks [sic] that need to be completed during times of the season when our staffing is not up to its full potential. Typically those times of the year are mid-April weekends through Memorial Day, and mid-August through the end of September. Select groups will be asked to work needed shifts for our shoulder season events… After a group’s shift is completed, a check will be made out to the non-profit organization within one month of the completed shift.

Each volunteer will receive $5.85 per hour – and a voucher for free admission – and training will be given. I’m guessing there’s some mistake here:

We only have two requirements:

  • All volunteers must be at least 18 years of age
  • All volunteers must represent a non-profit organization
  • All volunteers must reside in the state of Pennsylvania

But certainly if you have to be a resident of Pennsylvania that’s a bit of a damper.

Presumably Hershey is getting some major tax benefits as well as dealing with some gaps in their employment and you have to wonder if a lot of other corporations with similar low-skilled needs couldn’t take advantage of these tax advantages at the same time.

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Bribery, Cntd.

1. Sometimes, bribery is actually helpful:
India has outlawed cattle exports, but that hasn’t prevented well-organized traffickers from herding millions of the unlucky beasts each year onto trains and trucks, injecting them with drugs on arrival so they walk faster, then forcing them to ford rivers and lumber into slaughterhouses immediately across the border…. “The border guards are in on it, both in India and Bangladesh, and take bribes to look the other way,” said Yasin Mullah, 55, a Murshidabad shopkeeper and cow owner. “Smuggling is rampant these days with all the money and growing population.”
As Matt Yglesias points out (in, admittedly, a less extreme example), the sheer number of inefficient laws should make us think twice when wishing that enforcement was stronger across the board.  Dozens of useless laws lie fallow on the books, and sometimes having guards bribed is better than having the laws be cracked down on.
[HT: Marginal Revolution]
2. And sometimes it’s part of the bad government trap which Paul Collier has described in The Bottom Billion:
At least $300m (£200m) is paid in bribes at checkpoints in Ivory Coast each year… the total amount may be up to $600m… that would be more than 2% of the country’s economy.
The bribes are taken at roadblocks, where merchants are stopped and shaken down for roadside “fines”. As the article says, the Ivory Coast used to dominate the West of Africa economically. But it has fallen into a series of interlocking traps which hold down its growth. Basically, despite widespread intuitions that wars can ultimately promote economies by stimulating demand, the wars of the Ivory coast have decimated its economy. Clearly, not only is there damage to the actual goods of the society, but the divided areas of the country, the uncertainty of the rule of law and the huge number of armed young men roaming leaves the country in a trap that is very difficult to alleviate.

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